Medical shortages cost U.S. health systems millions: Premier survey
NORTH CAROLINA, UNITED STATES — Health systems across the United States are facing increased financial burdens as shortages in medical devices and drugs drive up care delivery costs by an average of $3.5 million per system.
This financial strain is further exacerbated by the need to delay care and forgo revenue, according to a recent survey by Premier, a consulting and group purchasing organization.
$3.5 million average cost increase per system
The survey, which gathered responses from 102 hospitals, health systems, and suppliers, found that more than half of the respondents had to cancel or reschedule procedures multiple times last year.
Critical supplies, including syringes, IV fluids, saline, aortic balloon catheters, and surgical tourniquets, are in short supply.
Persistent challenges expected to continue
Nearly 80% of providers expect supply chain issues to persist or worsen in the coming year. Geopolitical tensions, such as the Israel-Hamas and Russia-Ukraine conflicts, new tariffs on Chinese medical products, and natural disasters have all contributed to these shortages.
Additionally, inflation, backorders, and rising labor costs further complicate the situation.
Kyle MacKinnon, Premier’s Senior Director Of Operational Excellence, stated that “Inflation in the form of higher energy, labor, materials, transport, and logistics costs continues to be persistent. Providers are looking at ways to mitigate those pressures by leveraging technology, such as through predictive analytics and demand forecasting.”
Financial impact beyond direct costs
The shortages have disrupted care plans and impacted revenues. Mid-sized health systems, defined as those with five hospitals or 650 beds, have experienced an average rise of $3.5 million in care delivery costs.
Additionally, these shortages have led to an average revenue loss of $350,000 per system, with excess inventory costs tying up approximately $1 million in cash.
Nathan Leedahl, manager of pharmacy operations at Sanford Health, highlighted the critical nature of these shortages, adding, “There are some lifesaving drugs that only one or two companies make. We continue to build out our on-hand supply so we are able to respond faster to shortages.”
Mitigation strategies and future outlook
In response to these challenges, health systems are expanding their supplier networks and increasing investments in domestic manufacturing.
Nearly 90% of providers view domestic manufacturing as essential for securing supply chains, with some investing in U.S.-based factories to produce personal protective equipment.
Moreover, more than 43% of providers are adopting advanced technologies such as artificial intelligence and blockchain to enhance supply chain resilience. These efforts include reworking supplier contracts, securing multiple sources for critical products, and improving disaster preparedness processes.
As the healthcare industry navigates these turbulent times, diversifying supply sources and identifying vulnerable sole-source markets remain pivotal strategies for ensuring stability and continuity in care delivery.
